St. Louis Multifamily Fundamentals Remain Strong; New Deals Struggle to Pencil
Date Posted: September 22, 2026
Posted In: Discussion, Featured,
by Tom Finan, Executive Director, Construction Forum
St. Louis’ apartment market remains fundamentally sound, but high interest rates, construction costs, and tight development capital are making new projects increasingly difficult to finance.
That was the consensus of a multifamily panel Tuesday morning at the ninth annual St. Louis Commercial Real Estate Summit at the Hilton St. Louis Frontenac. RE Journals hosted the event.
The panel included Bobby Mills of GREA, Matt Bukhshtaber of CBRE, Kyle Howerton of AHM Group, Michael Hamburg of Pier Property Group, and Parker Stewart of Northmarq. John Morrissey Jr. of Broadmoor Group moderated.
Investment Activity Continues
Panelists estimated St. Louis multifamily sales volume could reach $600 million to $800 million this year, roughly comparable to last year but well below the approximately $1.5 billion recorded during the market’s strongest period.
Capital remains available for stabilized properties—particularly newer Class A and B assets that can be acquired below replacement cost. Panelists estimated current cap rates at approximately 5.25% to 5.75% for core-plus properties, 6% to 6.5% for quality Class B assets and 6.5% to 7.25% for Class C properties.
However, rapid movement in Treasury rates continues to disrupt transactions. A sale closing today may have been negotiated months earlier under significantly different financing conditions.
New Development Faces a Capital Gap
While investors remain interested in existing apartments, raising equity for new construction is considerably harder.
Developers said projects can still produce historically reasonable returns, but investors have other options that carry less risk and generate returns more quickly. Preferred-equity financing is available, but its cost can make projects untenable.
Construction costs are adding to the pressure. One panelist said hard costs for multifamily buildings with structured parking have climbed from roughly $200,000 to $215,000 per unit to approximately $290,000 per unit. At those costs, rents may need to exceed $3 per square foot to justify construction.
Developers are responding with smaller units, surface parking and garden-style designs. Competition from large institutional and data center projects is also tightening the regional supply of electricians, plumbers and other skilled trades.
Limited Supply Creates Opportunity—and Risk
St. Louis has avoided the massive apartment deliveries that have driven rent declines in markets such as Austin, Phoenix and Charlotte. Panelists cited approximately 2.5% annual rent growth locally and a relatively limited development pipeline.
That constrained pipeline could position new projects for strong performance over the next several years. But St. Louis remains highly dependent on individual submarkets. Panelists pointed to Midtown, where roughly 800 units delivered within a compressed period pushed occupancy sharply lower and triggered aggressive rent concessions. Much of that inventory has since been absorbed, although occupancy remains uneven.
Distress has been more visible downtown, while apartment fundamentals in St. Louis County and other suburban markets remain comparatively strong.
Build-to-rent housing also drew interest as an option for young families and empty nesters. Demand appears strong, but large sites suitable for those developments are scarce in St. Louis County and limited even in St. Charles County.
The panel’s outlook was cautious but far from pessimistic: St. Louis lacks the explosive growth of some competing markets, but its restrained supply, diversified employment base and steady rent performance make it an increasingly attractive—and comparatively stable—multifamily market.